Apply for Hardship Status
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Understanding Hardship Status: What to Expect?
Hardship status, sometimes also called Currently Not Collection (CNC) status, is a tax relief program the Internal Revenue Service (IRS) offers to taxpayers who are unable to pay their taxes due to financial hardship. Hardship status can help you avoid paying taxes you don’t owe, get a payment plan, or reduce your interest and penalties.
Hardship status, sometimes referred to as “Currently Not Collectible” or “CNC” status, is a specific tax relief designation granted by the Internal Revenue Service (IRS). This is only if you are in situations where you cannot pay outstanding tax debts due to genuine financial hardships
The Benefits of Hardship Status: Know from Expert CPAs
Being in hardship status has several benefits:
However, while you might be in hardship status, the IRS will review your financial situation to see if your circumstances have improved. This is where they might reinstate collection activities. Till the time it happens, our specialists at Ponci Tax Resolution Experts will make sure you’re on the safer side with the IRS.
Need help applying for a hardship status? Get direct solutions from expert CPAs and former IRS agents. Get in touch now!
Are you eligible for IRS Hardship Status: Know Who Qualifies for It
Are you unable to pay your taxes because it can cause you financial strain? For example, will paying your taxes can cause you distress in affording housing, food, or utilities, then here’s some small good news: You may qualify for this status.
To be eligible for hardship status:
Hardship Status Application Process: Everything You Need to Know
To submit an application for hardship status, you must file Form 13145, IRS Hardship Form. You can find this form on the IRS website.
When you file Form 13145, you will need to provide the following information:
You can file Form 13145 by mail, or electronically. If you file by mail, you should send it to the address on the form. If you file by fax, you should fax it to the number on the form. If you file electronically, you can do so through the IRS website.
What happens after you submit?
The IRS will review your application and decide whether to grant you hardship status. If your application is approved, the IRS will give you a payment plan or reduce your interest and penalties. In some cases, the IRS may also refund taxes that you have already paid.
If your application is denied, you may be able to appeal the decision. You can also contact the IRS for help applying for hardship status. Sometimes, procedures like these become extremely overwhelming and confusing. But, that’s why we’re here. We make the complex – easy.
Our experts helped more than 190 taxpayers in 41+ years. Want to be among our success stories? Let’s talk.
Which Documents are Necessary When Applying for Hardship Status?
When you’re gearing up to apply, be prepared. Alongside the hardship form IRS, you’ll also need to provide supporting documents. These documents offer a clearer picture of your financial circumstances. They include:
Always ensure that the information on your IRS hardship form matches the information in your supporting documents. Consistency and accuracy are the reasons why you get approval for a hardship status.
Our Process
Initial Consultation
We begin by understanding your current financial situation and the reasons you believe you qualify for a hardship status.
Review of Documents
We'll examine all your financial records to ensure you have a solid case. This includes bank statements, monthly bills, and any other relevant documents.
Completing the IRS Hardship Form
With our expertise, we'll help you accurately fill out the IRS hardship form. This form is crucial as it provides the IRS with an overview of your finances.
Our Process
Submission of application
Once we've completed the hardship form, IRS guidelines state that it must be submitted promptly. We ensure it reaches the right department without delay.
Regular Updates
We keep you in the loop. Till the time we hear from the IRS, we'll keep you informed on any updates or additional information they might request.
Final Steps
If the IRS approves your appeal, we'll guide you on the next steps. If not, we'll explore other available options.
Appealing a Denial of Hardship Status IRS: See what a Former IRS Agent Says
If you believe the denial was not justified or perhaps there were overlooked details, you can submit an appeal. The process usually involves providing additional documentation or clarification that can strengthen your case. If need be, we can help. All you have to do is a book it.
Steps to Appeal a Denial of Hardship Status
Review the Denial Notice
Before starting the appeal process, carefully read the denial notice sent by the IRS. It will typically outline the reasons for the denial, which will guide you on what additional information or clarification is needed.
Gather Additional Documents
If you've recently experienced more financial setbacks or have more evidence that supports your case, gather those documents. This could include updated bills, recent medical expenses, or any other relevant financial information.
Use the Right Forms
The IRS has specific forms for various purposes. To appeal a denial, you might need to use the "IRS hardship refund request form" or indicate interest in an "IRS hardship withdrawal." Ensure you fill out the required sections in detail and accurately.
Write a Detailed Letter
Along with your forms and supporting documents, write a clear and concise letter explaining your reasons for appealing the denial. Mention any changes in your circumstances or clarify any misunderstandings.
Submit Your Appeal
Once you have everything in order, send your appeal to the IRS. Make sure to keep copies of everything you send for your records.
Wait for a Response
The IRS will review your appeal and make a decision. This might take some time, so it's essential to be patient.
FAQs about Hardship Status
Yes, you can. The IRS considers both income and expenses when determining eligibility for hardship status. If your necessary living expenses are high and leave little to no room for tax payments, you may qualify for this relief.
The time frame varies based on the complexity of your situation and the IRS’s workload. Generally, it can take anywhere from a few weeks to a few months. It’s crucial to stay in touch with the IRS or check the status periodically.
Directly applying for hardship status won’t impact your credit score. However, if the IRS files a tax lien against you before or during the application process, that lien can appear on your credit report and potentially affect your score.
If your application is denied, the IRS will revert to its previous collection activities for your tax debts. This could include levies, liens, or garnishments. It’s essential to explore alternative payment or relief options swiftly.
Yes, if the IRS denies your hardship status application, you have the right to appeal the decision. The appeal process involves reviewing the determination with a higher authority within the IRS or with the Taxpayer Advocate Service.
To maintain your hardship status, stay compliant with all tax filing requirements and update the IRS about any significant changes in your financial situation. Remember, the IRS will review your status, so ensuring all information remains accurate and up-to-date is key.
Hardship status (a.k.a, “Currently Not Collectible” or “CNC” status) is a designation by the IRS for taxpayers who can’t pay their tax debts due to genuine financial hardships. It can offer temporary relief from collections, allowing taxpayers some breathing room to stabilize their financial situation.
To qualify, you must demonstrate to the IRS that paying your owed taxes would result in significant financial distress, meaning your income barely covers or doesn’t cover your basic living expenses. The IRS will review factors like your income, expenses, and asset equity.
No, obtaining hardship status doesn’t erase your tax debt. It just temporarily halts the IRS’s collection activities. You’ll still owe the taxes, and interest may continue to accrue.
The duration varies. The IRS will periodically review your financial situation, generally every year or two. If your financial situation improves, the IRS may lift the hardship status and resume collection activities
Yes, the IRS will typically continue to charge interest on the unpaid balance. However, some taxpayers might be eligible for abatements or reductions in penalties while under hardship status.
Yes, the IRS can revoke your hardship status if they determine that your financial situation has improved significantly. They’ll conduct periodic reviews to assess this.